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ASIC verification requirements not a witch hunt

When it comes to client verification requirements, ASIC has been upping the ante in what it expects from brokers – Broker TV speaks to Jon Denovan of Gadens Lawyers and Cliff Ferrer of 1st Street Home loans about how to comply.

Video transcript below:

Stephanie Zillman, Australian Broker TV
Stephanie Zillman: When it comes to the issue of client verification requirements, ASIC has been upping the ante on what it expects from brokers. According to Jon Denovan of Gadens Lawyers, complying with ASIC’s regulatory guidelines comes down to a commonsense approach.

Jon Denovan, Gadens Lawyers

Jon Denovan: I think brokers freak out because they are getting some misinformation and they misread reports. People try to spook them and people imagine that ASIC is here to get you. ASIC will actually help, if you making a genuine attempt to comply.

Stephanie Zillman: Chris Ferrer of 1st Street Home Loans agrees that while the regulatory guidelines have certainly become stricter, they are ultimately in place for the right reasons.

Chris Ferrer, 1st Street Home Loans

Chris Ferrer: Look we are in an industry that’s becoming more and more regulated as we go on. I mean, maybe 5, 6, 10 years ago when [financial firm] was early days, you definitely could get away with you know a lot more than you can now. So I think it is, kind of thing of which and I think it’s a necessary thing to make sure we protect the interest of both our clients as well as the banks.

Stephanie Zillman: Ferrer adds that the key to ensuring broker compliance is a combination of experience and paying due diligence to verifying the paperwork.

Chris Ferrer: Okay there are some grey areas in regards to say where brokers job finishes and where a credit department might commence. I think it’s really key to know, when you need to go beyond those requirements and when you might need to ask additional information from a client. People have been, brokers have been in this industry for a while will kind of understand those areas where they need to go over and above the normal minimum requirements.

Stephanie Zillman: Denovan says brokers needn’t fear the industry regulator and compliance can be seen as a 3 step equation.

Jon Denovan: See I don’t think the regulations are stringent. They are actually quite simple. It’s just the people freak out about them, read what it says, it’s a really simple test, make reasonable enquiries in relation to requirements, objectives and income, make a reasonable endeavour to verify that and make a reasonable assessment.

Stephanie Zillman: For Ferrer when the documents don’t add up, it may be a matter of walking away from the transaction.

Chris Ferrer: The way we would probably proceed is probably not go ahead with the transaction and walk from the business. At the end of the day, we are in an industry that is regulated for a reason, protection of client’s interests as well as obviously our licenses.

Stephanie Zillman: Denovan adds that the assumption is that most brokers are doing the right thing and it’s not a witch hunt.

Jon Denovan: That’s the problem with our industry. The objective in this regulation was to get the cowboys out of the industry. We still have cowboys in the industry, 99.9% recurring brokers do the right thing most of the time and when they don’t it’s by mistake. There is some out there who try to bend the rules and take advantage of consumers and they are the ones that ASIC are after.

Stephanie Zillman: This is Stephanie Zillman reporting for Australian Broker TV.